1q17 earnings conference call€¦ · itgr: 1q17 earnings conference call / may 8, 2017 / page 14....

1Q17 Earnings Conference Call

May 8, 2017

Presentation of Financial Information & Forward Looking Statements

Historical financial and operating data in this presentation reflect the consolidated results of Integer for the periodsindicated.

This presentation includes financial information prepared in accordance with accounting principles generally accepted inthe United States, or GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financialmeasures in this presentation, which include Adjusted Net Income, Adjusted Diluted EPS, Earnings Before Interest TaxesDepreciation and Amortization (EBITDA), and Adjusted EBITDA, should be considered in addition to, but not assubstitutes for, the information prepared in accordance with GAAP. For reconciliations of these non-GAAP financialmeasures to the most comparable GAAP measures, please refer to the appendix to this presentation and the earningsrelease associated with this quarterly period which can be found in the investor relations section of our corporate website(www.integer.net).

Statements made in this presentation whether written or oral may be “forward-looking statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of Securities Exchange Act of 1934, asamended, and involve a number of risks and uncertainties. These statements can be identified by terminology such as“may,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or“continue” or “variations” or the negative of these terms or other comparable terminology. These statements are based onthe company’s current expectations and speak only as of May 8, 2017. The Company’s actual results could differmaterially from those stated or implied by such forward-looking statements. The Company assumes no obligation toupdate forward-looking information, including information in this presentation, to reflect changed assumptions, theoccurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

ITGR: 1Q17 Earnings Conference Call / May 8, 2017 / Page 2

http://www.integer.net/

Agenda

• Opening Comments

• Financial Results

• Product Line Review

• Strategic / Growth Initiatives

• Closing Comments

• Question & Answer Period


Opening Comments

Quarterly Results Reflect Continued Progress


“First quarter results

are in-line with our

full-year expectations

and demonstrate

continued progress

as we move our

business back to a

growth trajectory

following a

challenging 2016.”

• 1Q17 Financial Results• Revenue trajectory continues to improve• Adjusted Net Income up 26% organically• Strong cash flow generation supports continued deleveraging

• Operational and Commercial Results• Nearly complete with initial integration plans, focus shifting to

optimization of new business processes• Integration synergies on track for ~$50 million of cumulative

savings through YE 2017• Improving customer relationships yielding dividends in 1Q17

‒ Overcame a previously strained relationship to sign a multi-year outsourcing agreement of a 100% insourced product.

‒ Signed agreement with a large customer to manage a complex portion of their supply chain for an existing product line we currently manufacture

Revenue Recovery – Growth in 2017


4Q15 4Q16 1Q17 4Q17

0% to 3%

(2)%

(4)%

(1)%

Org

anic

Gro

wth

Revenue – Trailing 4 Quarters

Revenue trajectory continues to improve

OutlookTrailing 4-quarter Actuals

(5)%

5%

0%

Financial Results

1Q17 Adjusted Financial Results(1)


$( in millions, except per share amounts)

(1) Refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS to the most directly comparable GAAP measure(2) Organic growth for Revenue excludes the impact of foreign exchange and excludes the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016(3) Organic growth for Adjusted EBITDA and Adjusted Net Income exclude the impact of foreign exchange reported in other (income) loss, net

Revenue Adjusted EBITDA Adjusted Net Income

1Q16 1Q17 1Q16 1Q171Q16 1Q17

$331 $345

+5% organic(2)

$65 $64$13 $13

Adjusted EPS $0.42 $0.41

% Growth+4% reported

+4% organic(3)

(2)% reported+26% organic(3)

(1)% reported

-50%

-30%

-10%

10%

-20%

-10%

0%

10%

Continued Revenue Improvement in 1Q17


-15%

-10%

-5%

0%

5%

10%

1Q16 2Q16 3Q16 4Q16 1Q17

(7)% (8)%

(1)%0%

5%

0%

Integer(1)

1Q16 2Q16 3Q16 4Q16 1Q17

0%

0%

Advanced Surgical, Orthopedics & Portable Medical

-20%

-10%

0%

10%

0%

Cardiac & Neuromodulation

-20%

-10%

0%

10%

0%

Cardio & Vascular

Non-Medical (Electrochem)

(1) Excludes impact from changes in foreign currency exchange rates as well as the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. For reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure, please refer to the appendix of this document

Qua

rterly

YO

Y %

Cha

nge

Qua

rterly

YO

Y %

Org

anic

Cha

nge

• Returning to YOY revenue growth for the first time in five quarters


(1) Adjusted EBITDA, Adjusted EPS and Adjusted Net Income provided on a comparable basis. Comparable basis amounts for 1Q16 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Refer to the investor relations section of our website for historical pro forma information that contains a reconciliation of 1Q16 comparable amounts to as reported amounts. Refer to the appendix of this presentation for a reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS to the most directly comparable GAAP measure

(2) Organic amounts exclude the impact of foreign exchange reported in other (income) loss, net

Adjusted EBITDA(1)

$( in millions except per share amounts)

Driving Organic Growth to the Bottom Line

Adjusted EPS(1)

$0.42

$0.09 $(0.10)

$0.41

1Q16 1Q17

$13.1Adjusted

Net Income

$2.9 $(3.1) $12.9

Organic(2) FX

1Q16 1Q17

$65 $64$(4)$3

Organic(2) FX

$27 $30 $38 $120

$230

$938

$360

2017 2018 2019 2020 2021 2022 20231Q17

DebtPayments

Continued Strong Cash Flow Generation


• Generating sufficient cash flow to meet current debt obligations and accelerate debt repayment

• Repaid $29M of debt in 1Q17 – total payments of $73M since acquisition

• Continued focus on reducing leverage

• Near-term mandatory debt repayments very manageable

• Reduced interest on $1.0B of LT debt 75 bps

• No significant maturities until 2020

• 35% fixed rate

• Well within covenant compliance requirements

$( in millions)

(1) Free Cash Flow defined as Cash from Operations less Capital Expenditures

$( in millions)Cash Flow From Operations Free Cash Flow

$( in millions)

Future Mandatory Debt Repayment Schedule$( in millions)

$11

$18

$29

Accelerated RepaymentRequired Repayment

$(8)

$21 $22 $26

2Q16 3Q16 4Q16 1Q17

$4

$38 $34

$39

2Q16 3Q16 4Q16 1Q17

2016 2017

Reaffirming our Full-Year 2017 Outlook


2016 2017 2016 2017

Revenue Adjusted EPS Cash Flow from Operations

$1,386$2.68

$1,390 - $1,430$2.70 - $3.10

$106

~$150

Outlook Outlook Outlook

Product Line Review

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Advanced Surgical, Orthopedics & Portable Medical


Providing a wide range of technologies and solutions to the Advanced Surgical and Orthopedic markets

0%

YOY Growth(1)(2)

1Q16 2Q16 3Q16 4Q16 1Q17

7%

• 1Q17 Revenue up YOY, primarily driven by return to expected Portable Medical volumes, following completion of facility transfer in 2016

• Overall revenue performance is trending positively as a result of new product ramps in the Orthopedic and Arthroscopic product lines

• Expect incremental revenue growth in 2017 as new product launches reach anticipated volumes and base business sees increasing market growth

• Customer relationships remain strong; balancing customer needs for improved costs with continuous improvement initiatives and revenue growth

• Investments in innovation continue with focus on Wireless technology and Single Use Orthopedic instrumentation

(12)%

(5)% (3)% (3)%

(1) YOY growth rates calculated using the Company’s revised method to present sales by product-line. See slide 25 for further information.

(2) 2017 YOY growth rate excludes the impact of foreign exchange

% C

hang

e

Orthopedic Implants & Instruments

Biopsy & Drug Delivery

Portable Medical (Power Solutions)

Laparoscopy &General Surgery Arthroscopy Products

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Cardio & Vascular


Offering a full-range of products and services for catheter-based interventional vascular devices and a suite of supply chain solutions to support the

development and manufacturing of complex components, sub-assemblies and finished devices

Steerable Sheaths Catheters & Sheaths Guidewires, Stylets & Accessories

Introducers

0%

1Q16 2Q16 3Q16 4Q16 1Q17

10%

• Growth driven by longevity and strength of existing OEM and contract component business

• Historical variability in growth driven by customer stocking actions taken in advance of product facility transfers – expect to see more normalized demand pattern in future quarters

• Positive outlook for 2017 – several new opportunities, well-positioned in sales process

• Strong customer relationships enabling deeper penetration and increased customer opportunities for future revenue

(2)%

0% 2%

9%

YOY Growth(1)

% C

hang

e


-20%

-15%

-10%

-5%

0%

5%

10%

15%

Cardiac & Neuromodulation


Providing technology solutions for the active implantable medical device industry by partnering with customers to bring high-quality products to

established and emerging markets – from initial concept through to high-volume manufacturing

Pulse Generator Components & Assemblies

Leads & Lead Components, Adaptors & Assemblies

• Demand strengthening and production ramping throughout the year on several key customer product lines including batteries, enclosures, feedthroughs and machined components

• Driving mid- and long-term growth through active support of higher growth rate neuromodulation customers

• Positive outlook for 2017 – increased focus on customer relationships and value-added services expected to accelerate revenue opportunities

Pulse Generators & External Solutions (Programmers, Chargers, Patient Devices)

YOY Growth(1)(2)

0%

1Q16 2Q16 3Q16 4Q16 1Q17

(3)%(4)%

(13)%

3%

(5)%


(2) Excludes the results of Nuvectra Corporation prior to its spin-off on March 14, 2016

% C

hang

e

-50%

-40%

-30%

-20%

-10%

0%

10%

Electrochem


Enhancing lives worldwide by providing superior power solutions that enable the success and advancement of our customers’ critical applications

Battery Packs

• Revenue continues to trend towards YOY growth driven by increased North American energy customer activity

• Positive outlook for balance of 2017 pending continued stabilization in the Energy market

• Demonstrated history of operational and quality performance driving incremental revenue opportunities through market share gains and increased value add

• Military and Environmental customer volumes dependent on government funding

• Aggressively pursuing new customer and expanded market opportunities

0%

1Q16 2Q16 3Q16 4Q16 1Q17

(3)%

Battery ChargersBattery Cells

(34)%(41)%

(26)%

(14)%

YOY Growth(1)

% C

hang

e


Strategic / Growth Initiatives

Key Strategic Focus Areas


“Our vision is to

enhance the lives of

patients worldwide

by being our

customers’ partner of

choice for innovative

technologies and

services.”

• Executing our strategy• Serving the needs of our customers as their global device outsource partner

• Leveraging our global presence and breadth of capabilities to provide high quality manufactured products – from components to finished devices

• Delivering innovative design, process solutions and services

• Optimizing operations and commercial actions• Continuous improvement and productivity initiatives across global operations

• Executing supply chain optimization programs

• Standardizing IT systems across the organization

• Penetrating high-growth market areas

• Transitioning leadership to drive further growth• CEO search progressing well

• Interim CEO priorities – Execute existing strategy and deliver on Integer commitments to customers, associates and investors

• New CFO (Gary Haire) started May 1st, focusing on profitable growth, cash flow generation and operational improvements

Closing Comments

Well-Positioned for Future Growth


Operating & Manufacturing

Scalability

Strong Customer Relationships

Business Optimization

Driving Strong Cash Generation

Innovation Pipeline to Enable

Customer Success

Engineered Components

Engineered Sub-Assemblies

Contract Manufactured

Devices

Customer Owned / Co-Developed

Devices

Integer Owned Systems, Devices & Co-Developed

Product Solutions(More IP Focused)

Technical Solutions(Traditional CMO)

80% 20%

Broad Product Continuum

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCOHN5Z3gkscCFccUkgodjC4I2A&url=http://atticusfinancial.com/solid-financial-plan-critical-getting-project-funded/&ei=DG7CVeGXK8epyASM3aDADQ&bvm=bv.99261572,d.aWw&psig=AFQjCNE3uxJJgCUVLD4bd009OujrLF6Tww&ust=1438891848538116http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCOHN5Z3gkscCFccUkgodjC4I2A&url=http://atticusfinancial.com/solid-financial-plan-critical-getting-project-funded/&ei=DG7CVeGXK8epyASM3aDADQ&bvm=bv.99261572,d.aWw&psig=AFQjCNE3uxJJgCUVLD4bd009OujrLF6Tww&ust=1438891848538116

Question & Answer Period

APPENDIX

$114 $122 $129 $126 $125

$107 $107 $108 $116 $104

$98 $109 $100 $107 $105

$12 $10 $9

$11 $11

1Q16 2Q16 3Q16 4Q16 1Q17

Historical Financial Results


$0.42

$0.56

$0.83 $0.87

$0.41

1Q16 2Q16 3Q16 4Q16 1Q17

Revenue(1) Adjusted EPS(1)(2)

$345$331$348 $347 $360

Non-Medical

Cardiac & Neuro

Cardio & Vascular

Adv. Surgical, Ortho &Portable Medical (1) Revenue and Adjusted EPS information provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation

(“Nuvectra”) prior to its spin-off on March 14, 2016. Refer to the investor relations section of our website for historical pro forma information that contains a reconciliation of 1Q16 comparable amounts to as reported amounts.

(2) Refer to the appendix of this presentation for a reconciliation of Adjusted Net Income to the most directly comparable GAAP measure

$( in millions, except per share amounts)

Revised Product-Line Historical Financial Results(1)


2015 Product-Line Sales(2) 1Q15 2Q15 3Q15 4Q15 FY2015Medical Sales

Advanced Surgical, Orthopedics, & Portable Medical 112,081$ 115,113$ 103,764$ 109,941$ 440,899$ Cardiac & Neuromodulation 111,612 123,280 105,448 121,449 461,789 Cardio & Vascular 116,464 121,979 127,231 115,027 480,701

Total Medical Sales 340,157$ 360,372$ 336,443$ 346,417$ 1,383,389$ Non-Medical Sales (Electrochem) 17,710 16,545 11,977 13,217 59,449 Total Sales 357,867$ 376,917$ 348,420$ 359,634$ 1,442,838$

2016 Product-Line Sales(2) 1Q16 2Q16 3Q16 4Q16 FY2016Medical Sales

Advanced Surgical, Orthopedics, & Portable Medical 98,362$ 109,391$ 100,203$ 106,745$ 414,701$ Cardiac & Neuromodulation 107,353 106,919 108,147 115,942 438,361 Cardio & Vascular 113,671 122,253 129,347 125,586 490,857

Total Medical Sales 319,386$ 338,563$ 337,697$ 348,273$ 1,343,919$ Non-Medical Sales (Electrochem) 11,672 9,819 8,870 11,318 41,679 Total Sales 331,058$ 348,382$ 346,567$ 359,591$ 1,385,598$

(1) During 1Q17, the Company revised the method used to present sales by product-line in order to align the legacy Greatbatch and Lake Region methodologies. The Company believes the revised presentation will provide improved reporting and better transparency into the operational results of its business and markets. Prior period amounts have been reclassified to conform to the new product-line sales reporting presentation.

(2) Sales information provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Comparable amounts for 2015 exclude the results of Nuvectra and include the results of the former Lake Region Medical.

4Q16 Slides -->

Rolling Revenue

Quarterly Amounts1Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q174Q154Q161Q174Q17

Cardio and Vascular$ 115$ 119$ 124$ 112$ 114$ 122$ 129$ 126$ 1253%

Cardiac/Neuromodulation$ 115$ 127$ 110$ 124$ 107$ 107$ 108$ 116$ 104-2%-4%-1%0%

Advanced Surgical, Orthopedics & Portable Medical$ 110$ 115$ 103$ 110$ 98$ 110$ 100$ 107$ 105

Non-Medical$ 18$ 17$ 12$ 13$ 12$ 10$ 9$ 11$ 11

$ 358$ 378$ 349$ 359$ 331$ 348$ 347$ 360$ 345

Rolling 4-Quarter Amounts4Q151Q162Q163Q164Q161Q174Q17

Cardio and Vascular$ 470$ 469$ 472$ 477$ 491$ 502$ 1,390

Cardiac/Neuromodulation$ 476$ 468$ 448$ 446$ 438$ 43540

Advanced Surgical, Orthopedics & Portable Medical$ 438$ 426$ 421$ 418$ 415$ 422

Non-Medical$ 60$ 54$ 46$ 43$ 42$ 41

$ 1,444$ 1,417$ 1,387$ 1,385$ 1,386$ 1,400$ - 0$ - 0$ 1,430

-1%

Rolling 4-Quarter Revenue

Cardio and Vascular

4Q151Q162Q163Q164Q161Q174Q17470468.67099999999999471.92399999999998477.27099999999996490.85700000000003502.295000000000021390Cardiac/Neuromodulation

$1,430

4Q151Q162Q163Q164Q161Q174Q17476468.35199999999998448.27099999999996446.41800000000001438.36434.8209999999999740Advanced Surgical, Orthopedics & Portable Medical

4Q151Q162Q163Q164Q161Q174Q17438426.33100000000002420.89600000000002418.084414.84100000000001421.65600000000001Non-Medical

4Q151Q162Q163Q164Q161Q174Q176053.70300000000000346.34799999999999943.23299999999999741.53899999999999441.182000000000002

4Q154Q161Q174Q170.034Q154Q161Q174Q17-0.02-0.04-0.010

$1,386

$1,400

$1,385

$1,387

$1,417

$1,444

Revenue

Revenue Details1Q174Q163Q16

1Q152Q153Q154Q151Q162Q163Q164Q161Q17YOY%QOQ%LTMYOY%QOQ%YTD%YOY%QOQ%YTD%

Cardio and Vascular$ 116$ 122$ 127$ 115$ 114$ 122$ 129$ 126$ 12510%-0%5%9.2%-2.9%2.1%1.7%5.8%-0.1%

Cardiac/Neuromodulation$ 112$ 123$ 105$ 121$ 107$ 107$ 108$ 116$ 104-3%-10%-5%-4.5%7.2%-5.1%2.6%1.1%-5.3%

Advanced Surgical, Orthopedics & Portable Medical$ 112$ 116$ 104$ 112$ 98$ 110$ 100$ 107$ 1057%-2%-2%-4.3%6.6%-6.4%-3.6%-8.6%-7.2%

Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-28.9%-27.3%-7.9%-33.6%

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.1%-0.6%-0.5%-5.3%

Integer-7%-8%-1%-0%5%

Amy Wakeham: Amy Wakeham:Organic Constant Currency

C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Integer

1Q162Q163Q164Q161Q17

-7%-8%-1%-0%5%

1Q162Q163Q164Q161Q17

C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular

1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637Cardiac/Neuromodulation

1Q162Q163Q164Q161Q17107.352336597678106.91896797919399108.146981976204115.941976250189103.813140284005Advanced Surgical, Orthopedics & Portable Medical

1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859Non-Medical

1Q162Q163Q164Q161Q1711.703491829.64499527000000088.884881760000000711.30614017000000111.34579473

1Q162Q163Q164Q161Q17-7.4673945688922203E-2-7.5642564482374747E-2-6.4068262761733949E-3-3.6536369836234219E-30.05

C&V1Q162Q163Q164Q161Q17-2.398144938685742E-22.2456045811584486E-31.6630592642037218E-29.1792900927416834E-20.10062026029722243

CRMN1Q162Q163Q164Q161Q17-3.8162689591148331E-2-0.132717734811419572.5596806656107616E-2-4.5343209948390681E-2-3.2968041738455786E-2

ASO1Q162Q163Q164Q161Q17-0.12453389444318189-5.2698883550417019E-2-3.5808869488154982E-2-4.2923996612208686E-26.9303456408751504E-2

ELECTROCHEM1Q162Q163Q164Q161Q17-0.32661487817558199-0.39610392634892644-0.27255279978450375-0.12277891953081789-3.0563279361526505E-2

PL Revenue






Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-29.0%-27.3%-7.9%-33.7%

$ 358$ 377$ 349$ 361$ 332$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.0%-0.6%-0.5%-5.2%

Integer-7%-8%-1%-0%5%

C&V-2%0%2%9%10%

CRMN-3%-13%3%-5%-4%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular




1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Cardio and Vascular1Q162Q163Q164Q161Q17113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637

Cardiac/Neuromodulation1Q162Q163Q164Q161Q17108.533106.91896797919399108.146981976204115.941976250189103.813140284005

Advanced Surgical, Orthopedics & Portable Medical1Q162Q163Q164Q161Q1798.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859

Non-Medical1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473

Key Financial Results


1Q164Q161Q17FY15FY16

Sales$ 331$ 360$ 347$ 1,443$ 1,3864.8%

Gross Margin27.5%25.8%26.6%26.4%27.2%(0.52)

Operating Expenses$ 80$ 62$ 64$ 302$ 270-20.0%3.8%

% of Sales24.3%17.2%18.5%20.9%19.5%

GAAP Net Income (Loss)$ (13)$ 8$ (4)$ (39)$ 6

Adjusted Net Income$ 13$ 27$ 14$ 98$ 84

EBITDA$ 37$ 56$ 50$ 161$ 203

Adjusted EBITDA$ 65$ 71$ 65$ 304$ 280-0.2%

% of Sales19.7%19.6%18.8%21.1%20.2%

GAAP Diluted EPS$ (0.41)$ 0.25$ (0.11)$ (1.27)$ 0.19

Adjusted Diluted EPS$ 0.42$ 0.87$ 0.43$ 3.11$ 2.682.4%-50.6%

Cash Flow from Operations$ 30$ 34$ 39--$ 106

1Q161Q17

Revenue$ 331$ 345

Adjusted EBITDA$ 65$ 64

Adjusted Net Income$ 13$ 13

1Q16Revenue331.057999999999991Q17Revenue345.41300000000001

1Q16Adjusted EBITDA65.371Q17Adjusted EBITDA64.256

1Q16Adjusted Net Income13.11Q17Adjusted Net Income12.913

Adjusted EBITDA

4Q151Q162Q163Q164Q161Q17BaseFallRise

Adjusted EBITDA$ 79$ 65$ 69$ 75$ 71$ 64-2%1Q16$ - 0$ 65$ 65.370

Sales331348347360345Operations$ 65$ - 0$ 3$ 2.755

% of Sales20%20%22%20%19%Unrealized FX$ 64$ 4$ - 0$ (3.869)

1Q17$ 64$ 64.2566%

Adjusted EBITDA

1Q162Q163Q164Q161Q1765.3768.92700000000000775.01699999999999670.53499999999999764.256

Base1Q16OperationsUnrealized FX1Q1765.3764.25664.256Fall1Q16OperationsUnrealized FX1Q17003.8690000000000002Rise1Q16OperationsUnrealized FX1Q1765.372.75499999999999550

Adjusted EPS Walk

Adjusted EPS

Historical Adjusted EPS

BaseFallRise1Q162Q163Q164Q161Q17

1Q16$ - 0$ 0.42$ 0.42$ 0.42$ 0.56$ 0.83$ 0.87$ 0.41

Operations$ 0.42$ - 0$ 0.09$ 0.09

Unrealized FX$ 0.41$ 0.10$ - 0$ (0.10)

1Q17$ 0.41$ 0.41


1Q162Q163Q164Q161Q170.420.560000000000000050.830.870.41

Cash Flows

4Q151Q162Q163Q164Q161Q174Q151Q162Q163Q164Q161Q17

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39Free Cash Flow$ - 0$ 11$ (8)$ 21$ 22$ 26

Free Cash Flow$ - 0$ 11$ (8)$ 21$ 22$ 26Capex$ 19$ 12$ 17$ 11$ 12

Cash Flow from Operations$ - 0$ 30$ 4$ 38$ 34$ 39

Cash Flow from Operations

2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.41600000000000426.297000000000001

Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.41600000000000426.297000000000001


2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625

Debt

Debt Repayment Schedule

2H16201720182019202020212022+20231Q162Q163Q164Q16FY161Q17

Payment$ 15$ 27$ 30$ 38$ 120$ 230$ 938$ 360Req'd Debt Payments7.37.37.37.329.010.7

Add'l Payments2.0

Amy Wakeham: Amy Wakeham:borrowed and repaid in same quarter5.010.017.018.5

7.39.312.317.346.029.2

Payment

201720182019202020212022+2023273038120230938360

Req'd Debt Payments1Q1710.651Add'l Payments1Q1718.5

BS Metrics

4Q151Q162Q163Q164Q161Q17

Free Cash Flow$11$11($8)$21$22$26

Days Sales Outstanding05050505256

Inventory$252$267$276$262$225$231

Inventory Turns(1)4.53.73.73.74.44.5

Capital Expenditures$13$19$12$17$11$12

Days Payables Outstanding03136322732

Sales359,634331,058348,382346,567359,591345,413

COGS282,377240,770252,351248,658266,700254,187

Accounts Receivable183,563192,121191,409204,626213,610

EOP Net Inventory252,166267,380276,279262,232225,151231,292

BOP Net Inventory252,166267,380267,380276,279276,279262,232262,232225,151

Average Inventory259,773133,690271,830138,140269,256131,116243,692228,222

Accounts Payable83,30699,13586,29077,89690,713

ERROR:#DIV/0!

Working Capital

4Q151Q162Q163Q164Q161Q17FY16FY17

Current Assets$ 575$ 534$ 534$ 525$ 517$ 528$ 575$ 517

Current Liabilities$ 214$ 217$ 217$ 200$ 185$ 203$ 214$ 185

Working Capital$ 361$ 318$ 317$ 325$ 332$ 325$ 361$ 332

Current Ratio2.72.52.52.62.82.62.72.8

$ (29)

Working Capital

1Q162Q163Q164Q161Q17317.89699999999993316.61099999999999325.15800000000002332.08699999999999325.005

Guidance

Supplemental Financial Items Affecting Cash Flow

GAAPNon-GAAP(in millions, except effective tax rate):

As ReportedGrowthAdjusted BasisGrowth2017 Outlook2016 Actual201620172016201720162017

Revenue$1,390 to $1,4300% to 3%$1,390 to $1,4300% to 3%Capital expenditures$50 - $60$59Revenue$ 1,386$ 1,390Adjusted EPS$ 2.68$ 2.70Cash Flow From Operations$ 106150

Earnings per Diluted Share$1.03 to $1.43favorable$2.70 to $3.10 1% to 16%Depreciation and amortization$95 - $100$91$ 40$ 0.400

Cash Flow from Operations~$150~43%----Stock-based compensation~$13$8

Working capital decrease$10 - $20$29

Other operating expense$25 - $30$62

Adjusted effective tax rate~25%23%

Cash Taxes~$10~$7

Revenue20162017138613902016201740

Adjusted EPS201620172.682.7201620170.39999999999999991

Cash Flow From Operations20162017105.532150201620170

Appendix -->

Product-Line Sales

2015 Product-Line Sales(2)1Q152Q153Q154Q15FY2015

Medical Sales

Advanced Surgical, Orthopedics, & Portable Medical$ 112,081$ 115,113$ 103,764$ 109,941$ 440,899

Cardiac & Neuromodulation111,612123,280105,448121,449461,789

Cardio & Vascular116,464121,979127,231115,027480,701

Total Medical Sales$ 340,157$ 360,372$ 336,443$ 346,417$ 1,383,389

Non-Medical Sales (Electrochem)17,71016,54511,97713,21759,449

Total Sales$ 357,867$ 376,917$ 348,420$ 359,634$ 1,442,838

2016 Product-Line Sales(2)1Q162Q163Q164Q16FY2016

Medical Sales

Advanced Surgical, Orthopedics, & Portable Medical$ 98,362$ 109,391$ 100,203$ 106,745$ 414,701

Cardiac & Neuromodulation107,353106,919108,147115,942438,361

Cardio & Vascular113,671122,253129,347125,586490,857

Total Medical Sales$ 319,386$ 338,563$ 337,697$ 348,273$ 1,343,919

Non-Medical Sales (Electrochem)11,6729,8198,87011,31841,679

Total Sales$ 331,058$ 348,382$ 346,567$ 359,591$ 1,385,598

OOE

Three Months EndedTwelve Months Ended

1Q171Q161/1/1612/30/16NOTES:

2014 Investments in Capacity and Capabilities$1.6$4.2$23.0$17.2Portable Medical and Vascular product line transfers

Legacy Lake Region Medical Consolidation and Optimization$0.7$2.4$2.0$8.6

Acquisition and Integration Costs$4.8$10.0$33.5$28.3Lake Region Medical and CCC Medical Devices

Asset Dispositions, Severance, and Other$4.6$4.5$6.6$6.9Nuvectra spin-off in 1Q16Management transition costs in 1Q17

Other consolidation and disposition initiatives$0.1$0.1$18.2-$1.1

TOTAL OOE$11.8$21.1$83.3$59.9

(1)Details of Other Operating Expenses (OOE) provided on a comparable basis. Comparable basis amounts for 2016 exclude the results of Nuvectra Corporation (“Nuvectra”) prior to its spin-off on March 14, 2016. Comparable basis amounts for 2015 exclude the results of Nuvectra and include the results of the former Lake Region Medical. Historical pro forma information, which was filed with the SEC on Form 8-K on February 29, 2016, contains a reconciliation of 2015 comparable amounts to as reported amounts.

Guidance-recon table

GAAPAdjusted Comparable Basis

HighLowHighLow

Revenue$1,430$1,390$1,430$1,390

Earnings per Diluted Share$1.50$1.10$3.10$2.70

Debt Covenants

Mechanics of Financial Covenant Calculations

Financial Covenant Calculations(1)(2)

Leverage Ratio (< 6.25 @ 4Q16)

Leverage Ratio = Net Debt / R12 Bank EBITDA

Interest Coverage Ratio (> 2.50 @ 4Q16)

Interest Coverage Ratio = R12 Bank EBITDA / R12 Cash Interest Expense(3)

Net Debt

Net DEBT = Total Debt - Cash & Cash Equivalents (not to exceed $50M)

Bank EBITDA

R12 Bank EBITDA = R12 Adjusted EBITDA + Future Synergies and Cost Savings(4)

Working Capital


Working Capital$( in millions)

$318 $317 $325 $332 $325

1Q16 2Q16 3Q16 4Q16 1Q17

(1) Inventory Turns calculated as “COGS divided by quarterly Average Inventory multiplied by 4” to reach an annualized number

1Q16 2Q16 3Q16 4Q16 1Q17

Inventory $267 $276 $262 $225 $231

Inventory Turns(1) 3.7 3.7 3.7 4.4 4.5

Capital Expenditures $19 $12 $17 $11 $12

4Q16 Slides -->

Rolling Revenue





Non-Medical$ 18$ 17$ 12$ 13$ 12$ 10$ 9$ 11$ 11

$ 358$ 378$ 349$ 359$ 331$ 348$ 347$ 360$ 345





Non-Medical$ 60$ 54$ 46$ 43$ 42$ 41

$ 1,444$ 1,417$ 1,387$ 1,385$ 1,386$ 1,400$ - 0$ - 0$ 1,430

-1%


Cardio and Vascular


$1,430



4Q151Q162Q163Q164Q161Q174Q176053.70300000000000346.34799999999999943.23299999999999741.53899999999999441.182000000000002

4Q154Q161Q174Q170.034Q154Q161Q174Q17-0.02-0.04-0.010

$1,386

$1,400

$1,385

$1,387

$1,417

$1,444

Revenue






Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-28.9%-27.3%-7.9%-33.6%

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.1%-0.6%-0.5%-5.3%

Integer-7%-8%-1%-0%5%


C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Integer

1Q162Q163Q164Q161Q17

-7%-8%-1%-0%5%

1Q162Q163Q164Q161Q17

C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular




1Q162Q163Q164Q161Q1711.703491829.64499527000000088.884881760000000711.30614017000000111.34579473

1Q162Q163Q164Q161Q17-7.4673945688922203E-2-7.5642564482374747E-2-6.4068262761733949E-3-3.6536369836234219E-30.05

C&V1Q162Q163Q164Q161Q17-2.398144938685742E-22.2456045811584486E-31.6630592642037218E-29.1792900927416834E-20.10062026029722243

CRMN1Q162Q163Q164Q161Q17-3.8162689591148331E-2-0.132717734811419572.5596806656107616E-2-4.5343209948390681E-2-3.2968041738455786E-2

ASO1Q162Q163Q164Q161Q17-0.12453389444318189-5.2698883550417019E-2-3.5808869488154982E-2-4.2923996612208686E-26.9303456408751504E-2


PL Revenue






Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-29.0%-27.3%-7.9%-33.7%

$ 358$ 377$ 349$ 361$ 332$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.0%-0.6%-0.5%-5.2%

Integer-7%-8%-1%-0%5%

C&V-2%0%2%9%10%

CRMN-3%-13%3%-5%-4%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular




1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473







1Q164Q161Q17FY15FY16

Sales$ 331$ 360$ 347$ 1,443$ 1,3864.8%

Gross Margin27.5%25.8%26.6%26.4%27.2%(0.52)


% of Sales24.3%17.2%18.5%20.9%19.5%



EBITDA$ 37$ 56$ 50$ 161$ 203

Adjusted EBITDA$ 65$ 71$ 65$ 304$ 280-0.2%

% of Sales19.7%19.6%18.8%21.1%20.2%

GAAP Diluted EPS$ (0.41)$ 0.25$ (0.11)$ (1.27)$ 0.19



1Q161Q17

Revenue$ 331$ 345






Adjusted EBITDA





1Q17$ 64$ 64.2566%

Adjusted EBITDA

1Q162Q163Q164Q161Q1765.3768.92700000000000775.01699999999999670.53499999999999764.256


Adjusted EPS Walk

Adjusted EPS

Historical Adjusted EPS

BaseFallRise1Q162Q163Q164Q161Q17

1Q16$ - 0$ 0.42$ 0.42$ 0.42$ 0.56$ 0.83$ 0.87$ 0.41

Operations$ 0.42$ - 0$ 0.09$ 0.09

Unrealized FX$ 0.41$ 0.10$ - 0$ (0.10)

1Q17$ 0.41$ 0.41


1Q162Q163Q164Q161Q170.420.560000000000000050.830.870.41

Cash Flows

4Q151Q162Q163Q164Q161Q174Q151Q162Q163Q164Q161Q17






2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.41600000000000426.297000000000001

Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.41600000000000426.297000000000001


2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625

Debt


2H16201720182019202020212022+20231Q162Q163Q164Q16FY161Q17


Add'l Payments2.0


7.39.312.317.346.029.2

Payment

201720182019202020212022+2023273038120230938360


BS Metrics

4Q151Q162Q163Q164Q161Q17

Free Cash Flow$11$11($8)$21$22$26


Inventory$252$267$276$262$225$231

Inventory Turns(1)4.53.73.73.74.44.5



Sales359,634331,058348,382346,567359,591345,413

COGS282,377240,770252,351248,658266,700254,187






ERROR:#DIV/0!

Working Capital

4Q151Q162Q163Q164Q161Q17FY16FY17

Current Assets$ 575$ 534$ 534$ 525$ 517$ 528$ 575$ 517


Working Capital$ 361$ 318$ 317$ 325$ 332$ 325$ 361$ 332

Current Ratio2.72.52.52.62.82.62.72.8

$ (29)

Working Capital

1Q162Q163Q164Q161Q17317.89699999999993316.61099999999999325.15800000000002332.08699999999999325.005

Guidance










Cash Taxes~$10~$7

Revenue20162017138613902016201740

Adjusted EPS201620172.682.7201620170.39999999999999991


Appendix -->

OOE


1Q171Q161/1/1612/30/16NOTES:



Acquisition and Integration Costs$4.8$10.0$33.5$28.3Lake Region Medical and CCC Medical Devices



TOTAL OOE$11.8$21.1$83.3$59.9




HighLowHighLow

Revenue$1,430$1,390$1,430$1,390


Debt Covenants







Net Debt


Bank EBITDA


Other Operating Expenses


1Q17 1Q16 NOTES:

2014 Investments in Capacity and Capabilities $1.6 $4.2

Portable Medical and Vascular product line transfers

Legacy Lake Region Medical Consolidation and Optimization $0.7 $2.4

Acquisition and Integration Costs $4.8 $10.0 Lake Region Medical

Asset Dispositions, Severance, and Other $4.6 $4.5

Nuvectra spin-off in 1Q16Management transition costs in 1Q17

Other consolidation and disposition initiatives $0.1 $0.1

TOTAL OOE $11.8 $21.1

Three Months Ended

4Q16 Slides -->

Rolling Revenue





Non-Medical$ 18$ 17$ 12$ 13$ 12$ 10$ 9$ 11$ 11

$ 358$ 378$ 349$ 359$ 331$ 348$ 347$ 360$ 345





Non-Medical$ 60$ 54$ 46$ 43$ 42$ 41

$ 1,444$ 1,417$ 1,387$ 1,385$ 1,386$ 1,400$ - 0$ - 0$ 1,430

-1%


Cardio and Vascular


$1,430



4Q151Q162Q163Q164Q161Q174Q176053.70300000000000346.34799999999999943.23299999999999741.53899999999999441.182000000000002

4Q154Q161Q174Q170.034Q154Q161Q174Q17-0.02-0.04-0.010

$1,386

$1,400

$1,385

$1,387

$1,417

$1,444

Revenue






Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-28.9%-27.3%-7.9%-33.6%

$ 358$ 377$ 349$ 361$ 331$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.1%-0.6%-0.5%-5.3%

Integer-7%-8%-1%-0%5%


C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Integer

1Q162Q163Q164Q161Q17

-7%-8%-1%-0%5%

1Q162Q163Q164Q161Q17

C&V-2%0%2%9%10%

CRMN-4%-13%3%-5%-3%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular

2Q153Q154Q151Q162Q163Q164Q161Q17121.979441991386127.230779739116115.026915926538113.671185105071122.253359585129129.346703008486125.585570224169125.108809338637Cardiac/Neuromodulation

2Q153Q154Q151Q162Q163Q164Q161Q17123.280473117879105.447853653923121.44885728401107.352336597678106.91896797919399108.146981976204115.941976250189103.813140284005Advanced Surgical, Orthopedics & Portable Medical

2Q153Q154Q151Q162Q163Q164Q161Q17115.660508141102103.908907401916111.54502718894598.3309374606539109.56532849119201100.18804689810401106.757068819778105.14561129859Non-Medical

2Q153Q154Q151Q162Q163Q164Q161Q1715.97128329000000112.21378233000000112.88858695000000111.703491829.64499527000000088.884881760000000711.30614017000000111.34579473

1Q162Q163Q164Q161Q17-7.4673945688922203E-2-7.5642564482374747E-2-6.4068262761733949E-3-3.6536369836234219E-30.05

C&V1Q162Q163Q164Q161Q17-2.398144938685742E-22.2456045811584486E-31.6630592642037218E-29.1792900927416834E-20.10062026029722243

CRMN1Q162Q163Q164Q161Q17-3.8162689591148331E-2-0.132717734811419572.5596806656107616E-2-4.5343209948390681E-2-3.2968041738455786E-2

ASO1Q162Q163Q164Q161Q17-0.12453389444318189-5.2698883550417019E-2-3.5808869488154982E-2-4.2923996612208686E-26.9303456408751504E-2


PL Revenue






Non-Medical$ 17$ 16$ 12$ 13$ 12$ 10$ 9$ 11$ 11-3%0%-22%-12.3%27.3%-29.0%-27.3%-7.9%-33.7%

$ 358$ 377$ 349$ 361$ 332$ 348$ 347$ 360$ 3454%-4%-1%-0.6%3.8%-4.0%-0.6%-0.5%-5.2%

Integer-7%-8%-1%-0%5%

C&V-2%0%2%9%10%

CRMN-3%-13%3%-5%-4%

ASO-12%-5%-4%-4%7%

ELECTROCHEM-33%-40%-27%-12%-3%

Cardio and Vascular




1Q162Q163Q164Q161Q1711.6720000000000019.64499527000000088.884881760000000711.30614017000000111.34579473







1Q164Q161Q17FY15FY16

Sales$ 331$ 360$ 347$ 1,443$ 1,3864.8%

Gross Margin27.5%25.8%26.6%26.4%27.2%(0.52)


% of Sales24.3%17.2%18.5%20.9%19.5%



EBITDA$ 37$ 56$ 50$ 161$ 203

Adjusted EBITDA$ 65$ 71$ 65$ 304$ 280-0.2%

% of Sales19.7%19.6%18.8%21.1%20.2%

GAAP Diluted EPS$ (0.41)$ 0.25$ (0.11)$ (1.27)$ 0.19



1Q161Q17

Revenue$ 331$ 345






Adjusted EBITDA





1Q17$ 64$ 64.2566%

Adjusted EBITDA

1Q162Q163Q164Q161Q1765.3768.92700000000000775.01699999999999670.53499999999999764.256


Adjusted EPS Walk

Adjusted EPS

BaseFallRise

1Q16$ - 0$ 0.42$ 0.42

Operations$ 0.42$ - 0$ 0.09$ 0.09

Unrealized FX$ 0.41$ 0.10$ - 0$ (0.10)

1Q17$ 0.41$ 0.41


Cash Flows

4Q151Q162Q163Q164Q161Q174Q151Q162Q163Q164Q161Q17






2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.06900000000000326.297000000000001

Free Cash Flow

2Q163Q164Q161Q17-7.738000000000000421.47899999999999922.06900000000000326.297000000000001


2Q163Q164Q161Q173.895999999999999938.04500000000000233.73299999999999738.625

Debt


2H16201720182019202020212022+20231Q162Q163Q164Q16FY161Q17


Add'l Payments2.0


7.39.312.317.346.029.2

Payment

201720182019202020212022+2023273038120230938360


BS Metrics

4Q151Q162Q163Q164Q161Q17

Free Cash Flow$11$11($8)$21$22$26


Inventory$252$267$276$262$225$231

Inventory Turns(1)4.53.73.73.74.44.5



Sales359,634331,058348,382346,567359,591345,413

COGS282,377240,770252,351248,658266,700254,187






ERROR:#DIV/0!

Working Capital

4Q151Q162Q163Q164Q161Q17FY16FY17

Current Assets$ 575$ 534$ 534$ 525$ 517$ 528$ 575$ 517


Working Capital$ 361$ 318$ 317$ 325$ 332$ 325$ 361$ 332

Current Ratio2.72.52.52.62.82.62.72.8

$ (29)

Working Capital

1Q162Q163Q164Q161Q17317.89699999999993316.61099999999999325.15800000000002332.08699999999999325.005

Guidance










Cash Taxes~$10~$7

Revenue20162017138613902016201740

Adjusted EPS201620172.682.7201620170.39999999999999991


Appendix -->

OOE


1Q171Q161/1/1612/30/16NOTES:



Acquisition and Integration Costs$4.8$10.0$33.5$28.3Lake Region Medical



TOTAL OOE$11.8$21.1$83.3$59.9




HighLowHighLow

Revenue$1,430$1,390$1,430$1,390


Debt Covenants







Net Debt


Bank EBITDA



Non-GAAP ReconciliationNet Income and Diluted EPS Reconciliation – QTD

See the Footnotes to this table on Slide 31 of this presentation

Three Months Ended March 31, 2017 April 1, 2016

(in thousands except per share amounts) Pre-Tax

Net Income (Loss)

Per Diluted Share Pre-Tax

Net Income (Loss)

Per Diluted Share

As reported (GAAP) $ (4,195 ) $ (4,339 ) $ (0.14 ) $ (12,762 ) $ (12,660 ) $ (0.41 Adjustments:

Amortization of intangibles(a) 10,978 7,746 0.24 9,464 6,691 0.21 IP related litigation (SG&A)(a)(b) 377 245 0.01 1,907 1,240 0.04 Consolidation and optimization expenses (OOE)(a)(c) 2,395 1,899 0.06 6,649 5,314 0.17

Acquisition and integration expenses (OOE)(a)(d) 4,820 3,133 0.10 9,965 6,511 0.21

Asset dispositions, severance and other (OOE)(a)(e) 4,556 2,957 0.09 4,526 4,226 0.14

(Gain) loss on cost and equity method investments, net(a) 398 259

0.01

(1,301 ) (846 ) (0.03

Loss on extinguishment of debt(a)(f) 1,559 1,013 0.03 — — — Nuvectra results prior to spin-off(a)(g) — — — 4,037 2,624 0.08 Taxes(a) (7,975 ) — — (9,385 ) — —

Adjusted (Non-GAAP) $ 12,913 $ 0.41 $ 13,100 $ 0.42

Adjusted diluted weighted average shares(h) 31,685 31,253

Non-GAAP Reconciliation1Q17 Net Income and Diluted EPS Reconciliation



GAAP Non-GAAP

Income Statement 1Q17 Actual Amortization

Litigation Related

Charges(b)Consolidation & Optimization(c)(e)

Acquisition & Integration(d)

Debt / Investment

Related Charges(f) 1Q17 Adjusted

Sales 345,413$ 345,413$ Cost of sales 254,187 (4,084) 250,103

Gross profit 91,226$ 4,084$ -$ -$ -$ -$ 95,310$ Gross margin 26.4% 27.6%

Operating expenses:SG&A 39,499 (6,758) (377) 32,364

SG&A as a % of revenues 11.4% 9.4%Research, development & engineering 13,411 (136) 13,275

RD&E as a % of revenues 3.9% 3.8%Other operating expense 11,771 (6,951) (4,820) -

Operating income 26,545$ 10,978$ 377$ 6,951$ 4,820$ -$ 49,671$ Operating margin 7.7% 14.4%

Other (income) & expenses:Interest expense 28,893 (1,559) 27,334 Interest income - - Other (income) loss, net 1,847 (398) 1,449

Loss before income taxes (4,195)$ 10,978$ 377$ 6,951$ 4,820$ 1,957$ 20,888$ Provision for income taxes 144 3,232 132 2,095 1,687 685 7,975 Effective tax rate -3.43% 38.18%

Net income (loss) (4,339)$ 7,746$ 245$ 4,856$ 3,133$ 1,272$ 12,913$ Net margin -1.3% 3.7%

Weighted Average Shares O/S (h) 31,685 31,685 31,685 31,685 31,685 31,685 31,685 EPS (0.14)$ 0.24$ 0.01$ 0.15$ 0.10$ 0.04$ 0.41$

Non-GAAP Adj.(a)

1Q16

Integer Holdings Corporation

Non-GAAP Adj. Net Income - 2 views

1Q16

GAAPNon-GAAP Adj.Non-GAAP

Income Statement1Q16 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Nuvectra Spin(g)Debt / Investment Related Charges(f)1Q16 Adjusted

Sales$ 332,238$ (1,180)$ 331,058

Cost of sales240,770(4,240)(526)236,004

Gross profit$ 91,468$ 4,240$ - 0$ - 0$ - 0$ (654)$ - 0$ 95,054

Gross margin27.5%28.7%

Operating expenses:

SG&A41,888(5,136)(1,907)(1,913)32,932

SG&A as a % of revenues12.6%9.9%

Research, development & engineering17,306(88)(2,778)14,440

RD&E as a % of revenues5.2%4.3%

Other operating expense21,140(11,175)(9,965)- 0- 0

Operating income$ 11,134$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ - 0$ 47,682

Operating margin3.4%14.4%

Other (income) & expenses:

Interest expense27,61727,617

Interest income- 0- 0

Other (income) loss, net(3,721)1,301(2,420)

Loss before income taxes$ (12,762)$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ (1,301)$ 22,485

Provision for income taxes(102)2,7736671,6353,4541,413(455)9,385

Effective tax rate0.80%41.74%

Net income (loss)$ (12,660)$ 6,691$ 1,240$ 9,540$ 6,511$ 2,624$ (846)$ 13,100

Net margin-3.8%4.0%

Weighted Average Shares O/S(h)31,25331,25331,25331,25331,25331,25331,25331,253

EPS$ (0.41)$ 0.21$ 0.04$ 0.31$ 0.21$ (0.03)$ 0.42

Net Income Adjustments

Inventory step-up amortization- 0

Amortization of intangibles6,691

IP related litigation 1,240

Consolidation and optimization expenses (OOE)5,314

Acqusition and integration expenses (OOE)6,511

Asset dispositions, severance and other (OOE)4,226

Lake Region Medical transaction costs

Loss (gain) on cost and equity method investments, net (846)

Nuvectra results prior to spin-off2,624

Tax adjustments- 0

Comparable basis adjustments, net- 0

Adjusted Net Income (Non-GAAP)$ 13,100

Adjusted EPS (Non-GAAP)$ 0.42

2Q16


Non-GAAP Adjustments - 2 views

2Q16


Income Statement2Q16 ActualAmortizationLitigation Related ChargesConsolidation & OptimizationAcquisition & IntegrationDebt / Investment Related Charges2Q16 Adjusted

Sales$ - 0

Cost of sales- 0

Gross profit$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0

Gross marginERROR:#DIV/0!ERROR:#DIV/0!

Operating expenses:

SG&A- 0

SG&A as a % of revenuesERROR:#DIV/0!ERROR:#DIV/0!

Research, development & engineering- 0

RD&E as a % of revenuesERROR:#DIV/0!ERROR:#DIV/0!

Other operating expense- 0

Operating income$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0

Operating marginERROR:#DIV/0!ERROR:#DIV/0!


Interest expense- 0

Interest income- 0

Other (income) loss, net- 0

Loss before income taxes$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0

Provision for income taxes8,147

Effective tax rateERROR:#DIV/0!ERROR:#DIV/0!

Net income (loss)$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ (8,147)

Net marginERROR:#DIV/0!ERROR:#DIV/0!

Weighted Average Shares O/S- 0

EPSERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!



Amortization of intangibles

IP related litigation

Consolidation and optimization expenses (OOE)

Acqusition and integration expenses (OOE)

Asset dispositions, severance and other (OOE)


Loss (gain) on cost and equity method investments, net

Loss on extinguishment of debt

Tax adjustments

Comparable basis adjustments, net

Adjusted Net Income (Non-GAAP)$ - 0

Adjusted EPS (Non-GAAP)ERROR:#DIV/0!

3Q16



3Q16



Sales$ - 0

Cost of sales- 0

Gross profit$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0


Operating expenses:

SG&A- 0








Interest expense- 0

Interest income- 0





Net income (loss)$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ (8,147)














Tax adjustments




4Q16



4Q16



Sales$ - 0

Cost of sales- 0

Gross profit$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0


Operating expenses:

SG&A- 0








Interest expense- 0

Interest income- 0





Net income (loss)$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ (8,147)














Tax adjustments




FY16



Full-Year 2016


Income StatementFY16 ActualAmortizationLitigation Related ChargesConsolidation & OptimizationAcquisition & IntegrationDebt / Investment Related ChargesFY16 Adjusted

Sales$ - 0

Cost of sales- 0

Gross profit$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0


Operating expenses:

SG&A- 0








Interest expense- 0

Interest income- 0





Net income (loss)$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ - 0$ (8,147)














Tax adjustments




1Q17


Non-GAAP Adj. Net Income - 2 views

1Q17

GAAPNon-GAAP Adj.(a)Non-GAAPNon-GAAP

Income Statement1Q17 ActualAmortizationLitigation Related Charges(b)Consolidation & Optimization(c)(e)Acquisition & Integration(d)Debt / Investment Related Charges(f)1Q17 Adjusted1Q16 Adjusted

Sales$ 345,413$ 345,413$ 331,058

Cost of sales254,187(4,084)250,103236,004

Gross profit$ 91,226$ 4,084$ - 0$ - 0$ - 0$ - 0$ 95,310$ 95,0540.3%

Gross margin26.4%27.6%28.7%

Operating expenses:

SG&A39,499(6,758)(377)32,36432,932

SG&A as a % of revenues11.4%9.4%9.9%

Research, development & engineering13,411(136)13,27514,440

RD&E as a % of revenues3.9%3.8%4.3%

Other operating expense11,771(6,951)(4,820)- 0- 0

Operating income$ 26,545$ 10,978$ 377$ 6,951$ 4,820$ - 0$ 49,671$ 47,6824.2%

Operating margin7.7%14.4%14.4%


Interest expense28,893(1,559)27,33427,617

Interest income- 0- 0- 0

Other (income) loss, net1,847(398)1,449(2,420)

Loss before income taxes$ (4,195)$ 10,978$ 377$ 6,951$ 4,820$ 1,957$ 20,888$ 22,485-7.1%

Provision for income taxes1443,2321322,0951,6876857,9759,385

Effective tax rate-3.43%38.18%41.74%

Net income (loss)$ (4,339)$ 7,746$ 245$ 4,856$ 3,133$ 1,272$ - 0$ 12,913$ 13,100-1.4%

Net margin-1.3%3.7%4.0%

Weighted Average Shares O/S(h)31,68531,68531,68531,68531,68531,68531,68531,253

EPS$ (0.14)$ 0.24$ 0.01$ 0.15$ 0.10$ 0.04$ 0.41$ 0.42

Net Income AdjustmentsPost-TAXPre-TAX

Inventory step-up amortization- 0- 0

Amortization of intangibles7,74610,978

IP related litigation 245377

Consolidation and optimization expenses (OOE)1,8992,395

Acqusition and integration expenses (OOE)3,1334,820

Asset dispositions, severance and other (OOE)2,9574,556


Loss (gain) on cost and equity method investments, net 259398

Loss on extinguishment of debt1,0131,559

Tax adjustments- 0

Comparable basis adjustments, net- 0

Adjusted Net Income (Non-GAAP)$ 12,913

Adjusted EPS (Non-GAAP)$ 0.41


Non-GAAP Reconciliation1Q16 Net Income and Diluted EPS Reconciliation


THREE MONTHS ENDED GAAP Non-GAAP

Income Statement 1Q16 Actual Amortization

Litigation Related

Charges(b)Consolidation & Optimization(c)(e)

Acquisition & Integration(d)

NuvectraSpin(g)

Debt / Investment

Related Charges(f) 1Q16 Adjusted

Sales 332,238$ (1,180)$ 331,058$ Cost of sales 240,770 (4,240) (526) 236,004

Gross profit 91,468$ 4,240$ -$ -$ -$ (654)$ -$ 95,054$ Gross margin 27.5% 28.7%

Operating expenses:SG&A 41,888 (5,136) (1,907) (1,861) 32,984

SG&A as a % of revenues 12.6% 9.9%Research, development & engineering 17,306 (88) (2,830) 14,388

RD&E as a % of revenues 5.2% 4.3%Other operating expense 21,140 (11,175) (9,965) - -

Operating income 11,134$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ -$ 47,682$ Operating margin 3.4% 14.4%

Other (income) & expenses:Interest expense 27,617 27,617 Interest income - - Other (income) loss, net (3,721) 1,301 (2,420)

Loss before income taxes (12,762)$ 9,464$ 1,907$ 11,175$ 9,965$ 4,037$ (1,301)$ 22,485$ Provision for income taxes (102) 2,773 667 1,635 3,454 1,413 (455) 9,385 Effective tax rate 0.80% 41.74%

Net income (loss) (12,660)$ 6,691$ 1,240$ 9,540$ 6,511$ 2,624$ (846)$ 13,100$ Net margin -3.8% 4.0%

Weighted Average Shares O/S (h)(j) 30,718 31,253 31,253 31,253 31,253 31,253 31,253 31,253 EPS(i) (0.41)$ 0.21$ 0.04$ 0.31$ 0.21$ 0.08$ (0.03)$ 0.42$

Non-GAAP Adj.(a)

Adjusted P&L-->

Combined 16 - 17


Non-GAAP Adjustments

Non-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2017 vs 2016 YoY Var %'s

Income Statement1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY

Sales3453663653471,4233313483473601,386141718(13)374%5%5%(4%)3%

Cost of sales2502602552461,011236248244263991141211(17)206%5%4%(6%)2%

Gross profit9510611010141295100102973940674170%6%7%4%4%

Operating expenses:

SG&A3233343413333323132128(1)1325(2%)2%11%6%4%

RD&E13131414541413111352(1)(0)212(8%)(1%)20%9%4%

Other operating expense0000000000

Operating income50606253225485560522152521104%9%3%1%4%


Interest expense2725252510328282828111(0)(3)(3)(3)(9)(1%)(9%)(10%)(11%)(8%)

Interest income0000000000

Other (income) loss, net10001(2)10(3)(5)4(1)(0)36(160%)(100%)(100%)(100%)(129%)

Loss before income taxes2134372912122263228109(2)85112(7%)32%14%3%11%

Provision for income taxes888731997125(1)(0)176(15%)(6%)18%1057%23%

Net income (loss)13262921901318262784(0)93(6)6(1%)50%13%(21%)7%

Weighted Average Shares O/S31.731.731.731.731.731.331.231.231.331.2001001%2%2%1%2%

EPS$ 0.41$ 0.83$ 0.92$ 0.67$ 2.83$ 0.42$ 0.56$ 0.83$ 0.87$ 2.68$ (0.01)$ 0.27$ 0.09$ (0.20)$ 0.15(3%)47%11%(23%)6%

Non-GAAPNon-GAAP2017 vs 2016 YoY Var $'s

Key Metrics1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q2Q3Q4QTY

Gross margin27.6%29.0%30.0%29.0%28.9%28.7%28.8%29.5%27.0%28.5%(1.1%)0.2%0.6%2.1%0.5%

SG&A as a % of revenues9.4%9.0%9.3%9.7%9.3%10.0%9.2%8.8%8.9%9.2%(0.6%)(0.3%)0.5%0.9%0.1%

RD&E as a % of revenues3.8%3.7%3.7%3.9%3.8%4.3%3.9%3.3%3.5%3.7%(0.5%)(0.2%)0.5%0.5%0.1%

Operating Income margin14.4%16.3%17.0%15.4%15.8%14.4%15.7%17.4%14.6%15.5%(0.0%)0.7%(0.4%)0.8%0.3%

Effective tax rate38.2%23.5%20.8%25.4%25.7%41.7%32.8%20.1%2.3%23.1%(3.6%)(9.3%)0.6%23.1%2.6%

Net Income margin3.7%7.2%8.0%6.2%6.3%4.0%5.0%7.4%7.6%6.0%(0.2%)2.1%0.6%(1.4%)0.3%

Combined 15 - 17


Non-GAAP Adjustments

Non-GAAPNon-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2017 vs 2016 YoY Var %'s2016 vs 2015 YoY Var $'s2016 vs 2015 YoY Var %'s

Income Statement1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q15 Actual2Q15 Actual3Q15 Actual4Q15 ActualFY15 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY1Q2Q3Q4QTY1Q2Q3Q4QTY

Sales3453663653471,4233313483473601,3863583773483601,443141718(13)374%5%5%(4%)3%(27)(29)(2)(0)(57)(7%)(8%)(1%)(0%)(4%)

Cost of sales2502602552461,0112362482442639912552662452551,021141211(17)206%5%4%(6%)2%(19)(18)(1)8(30)(7%)(7%)(0%)3%(3%)

Gross profit9510611010141295100102973941031111031054220674170%6%7%4%4%(8)(11)(1)(8)(27)(8%)(10%)(1%)(7%)(6%)

Operating expenses:

SG&A323334341333332313212837383331139(1)1325(2%)2%11%6%4%(4)(6)(3)1(11)(10%)(15%)(8%)3%(8%)

RD&E131314145414131113521211131046(1)(0)212(8%)(1%)20%9%4%32(2)2624%20%(12%)25%13%

Other operating expense000000000000000

Operating income5060625322548556052215556257632372521104%9%3%1%4%(7)(7)3(11)(22)(13%)(12%)6%(17%)(9%)


Interest expense272525251032828282811127272727107(0)(3)(3)(3)(9)(1%)(9%)(10%)(11%)(8%)111143%4%4%5%4%

Interest income0000000000

Other (income) loss, net10001(2)10(3)(5)(1)04(2)14(1)(0)36(160%)(100%)(100%)(100%)(129%)(1)0(4)(1)(6)111%62%(99%)57%(809%)

Loss before income taxes213437291212226322810929352639129(2)85112(7%)32%14%3%11%(6)(9)6(11)(20)(22%)(25%)22%(28%)(16%)

Provision for income taxes8887319971257761131(1)(0)176(15%)(6%)18%1057%23%220(10)(6)35%31%3%(94%)(19%)

Net income (loss)132629219013182627842228202898(0)93(6)6(1%)50%13%(21%)7%(9)(11)6(1)(14)(41%)(38%)28%(2%)(15%)

Weighted Average Shares O/S31.731.731.731.731.731.331.231.231.331.231.331.431.531.831.5001001%2%2%1%2%(0)(0)(0)(1)(0)(0%)(0%)(1%)(2%)(1%)

EPS$ 0.41$ 0.83$ 0.92$ 0.67$ 2.83$ 0.42$ 0.56$ 0.83$ 0.87$ 2.68$ 0.71$ 0.90$ 0.64$ 0.87$ 3.11$ (0.01)$ 0.27$ 0.09$ (0.20)$ 0.15(3%)47%11%(23%)6%$ (0.29)$ (0.33)$ 0.19$ (0.00)$ (0.44)(41%)(37%)29%(0%)(14%)

Non-GAAPNon-GAAPNon-GAAP2017 vs 2016 YoY Var $'s2016 vs 2015 YoY Var $'s

Key Metrics1Q17 Actual2Q17 RF43Q17 RF44Q17 RF4FY17 RF41Q16 Actual2Q16 Actual3Q16 Actual4Q16 ActualFY16 Actual1Q15 Actual2Q15 Actual3Q15 Actual4Q15 ActualFY15 Actual1Q2Q3Q4QTY1Q2Q3Q4QTY

Gross margin27.6%29.0%30.0%29.0%28.9%28.7%28.8%29.5%27.0%28.5%28.8%29.5%29.5%29.1%29.2%(1.1%)0.2%0.6%2.1%0.5%(0.1%)(0.7%)(0.1%)(2.1%)(0.8%)

SG&A as a % of revenues9.4%9.0%9.3%9.7%9.3%10.0%9.2%8.8%8.9%9.2%10.2%10.1%9.6%8.6%9.6%(0.6%)(0.3%)0.5%0.9%0.1%(0.3%)(0.9%)(0.7%)0.3%(0.4%)

RD&E as a % of revenues3.8%3.7%3.7%3.9%3.8%4.3%3.9%3.3%3.5%3.7%3.3%3.0%3.7%2.8%3.2%(0.5%)(0.2%)0.5%0.5%0.1%1.1%0.9%(0.4%)0.7%0.6%

Operating Income margin14.4%16.3%17.0%15.4%15.8%14.4%15.7%17.4%14.6%15.5%15.3%16.4%16.3%17.7%16.4%(0.0%)0.7%(0.4%)0.8%0.3%(0.9%)(0.7%)1.1%(3.1%)(0.9%)

Effective tax rate38.2%23.5%20.8%25.4%25.7%41.7%32.8%20.1%2.3%23.1%23.9%18.9%23.8%28.5%23.9%(3.6%)(9.3%)0.6%23.1%2.6%17.8%13.9%(3.6%)(26.2%)(0.9%)

Net Income margin3.7%7.2%8.0%6.2%6.3%4.0%5.0%7.4%7.6%6.0%6.2%7.5%5.8%7.7%6.8%(0.2

1q17 earnings conference call€¦ · itgr: 1q17 earnings conference call / may 8, 2017 / page 14....

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